Hi Dave, you probably answered a question of mine which was how TCBG was going to pay for this incredible growth that they will hopefully be starting soon.
As I understand it, TCBG has only 6 employees and no production facilities, but of course they do own (lease), the volpak machines and most importantly the 'Rip It Sip It ' pouch. This makes for very low overhead but how will they pay for the packaging and all the ingredients in their products plus shipping etc.? If they go from whatever their tiny revenues are at present to say $50 million next year, that would require some big capital.
On the other hand, will the companies Cliffstar, Sweet Ripe and the Power Group be responsible for all the inventories and operating expenses relating to all non BrainForest products and pay a royalty to TCBG? In the following press release it sort of states that:
July 24 /PRNewswire/ -- The Children's Beverage Group,
Inc. (BB: TCBG) has expanded their, agreement with Cliffstar
Corporation to include sales and marketing rights.
TCBG and Cliffstar Corporation have come to an agreement to allow
Cliffstar, in concert with TCBG to sell nationwide into all major mass
merchandisers and grocery chains, their exclusive "Rip It Sip It(TM)" no-spill pouch in 10% juice drinks and pure flavored spring water. Additionally, Cliffstar will manufacture, sell and market an expanded line of pouched products, which will include 100% fruit juice drink, citrus product and cranberry blends.
The agreement allows Cliffstar to access TCBG manufacturing capacity to produce these additional products. TCBG sales generated by these items are expected to exceed $10 million in 1999, and would be in addition to royalty fees paid on the unique patent-pending pouch.
This seems to say that Cliffstar has the right to use TCBG's volpaks and pouches to produce and sell private label juices to any other company who wants it. Cliffstar will pay a royalty to TCBG for each pouch. If this is true then TCBG will only need capital to produce and market their own juice line, BrainForest, which will no doubt only make up a fraction of the total sales when compared to the dozens of private label brands that already have distribution.
The Regional Institutional Bankers Association (RIBA) conference that you told us about would answer my question as to how they would pay for their expected growth if TCBG were to borrow money, offer debentures or hopefully not, sell shares to an investment banker.
On another note, whenever TCBG becomes a reporting company, all that will have to happen is for the stock price to hit $5.00 and they will qualify for the Nasdaq National Market. The total assets and income before taxes wouldn't have to be met because they would then have a market cap of over $75 million and would qualify.
nasdaq.com
Mark |
